SINGAPORE: Spot gold rebounded on Monday as Asian buyers rushed to snatch bargains after better-than-expected US jobs data helped prices fall nearly 2 percent in the previous session, but the uncertain global economic outlook remains supportive of bullion.
Spot gold gained 0.6 percent to $1,736.05 an ounce by 0307 GMT, after posting its biggest one-day drop in more than a month.
US gold was little changed at $1,739.10.
The surprisingly strong US labour market data on Friday boosted confidence in the recovery of the world's largest economy, lifting prices of shares and industrial metals while dampening hopes for fresh quantitative easing measures.
But traders and analysts said gold's outlook remains rosy as the uncertain global economic outlook will force central banks around the world keep their monetary policies accommodative.
"The QE3 (third round of quantitative easing) is less likely after the jobs data, but the longer-term low interest rate outlook is still potentially supportive of gold," said Nick Trevethan, senior commodity strategist of ANZ in Singapore.
In addition, bargain hunting from Asian buyers, especially from China, helped gold prices to rebound, traders said.
"There has been quite a lot of buying since Shanghai opened, as gold was 30 bucks cheaper than they last saw it," said a US-based trader.
"We will be supported around $1,730 in the next few hours, although when Europe comes in it would be an entirely different picture."
Greece is facing a deadline later today on whether to accept the painful terms of a new bailout to avoid a chaotic default.
Technical analysis suggested that spot gold could rise to $1,742 an ounce, said Reuters market analyst Wang Tao.
Money managers, including hedge funds and other large speculators, increased their bullish bets in gold, silver and copper futures and options in the week of Jan. 31, as prices of all three metals rose to multi-month highs.
Strong demand from China as well as India will likely continue buoying sentiment in bullion, said Trevethan of ANZ.
China, the world's largest gold producer, churned out a record of 360.95 tonnes of gold in 2011, which pushes the annual consumption to at least 800 tonnes based on calculations factoring the gold flow from Hong Kong to the mainland in the first 11 months of the year.
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